Mortgage and Real Estate Glossary of Terms

Mortgage, Real Estate and Insurance glossary of terms.

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Glossary of Terms

Mortgage. Real Estate & Insurance

I

Identity of Interest

Any interest between the buyer and seller other than the subject property, i.e., family relationship (parent selling to child), affiliation through business arrangement (employer selling to employee), etc.

Impound

Portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Known as escrows or reserves in some states.

Improved Land

Land having utilities, roads, or other improvements.

Improvements

Additions to raw land that normally increase its value, such as buildings, streets and sewers.

Inclusionary Zoning

Practice by which state or local governments impose zoning restrictions that require a specified percentage of new development in a designated area to be set aside to provide housing for low-and moderate-income persons.

Incurable Depreciation

Deterioration of an item that it is either impossible or economically infeasible to restore, correct, or replace.

Index

Number derived from a formula to characterize a set of data, which serves as an indicator for determining interest rate changes on ARMs/GPARMs. For any specific interest rate change date, the index will be the value that is most recently available 45 days prior to that date (for our standard plans. FHA ARMs and some negotiated ARM plans may specify a different number of days.)

Indirect Costs (Soft Costs)

Construction costs other than labor and materials. These include, but are not limited to, architect fees, building permits, builder profit and overhead, temporary utilities for the job site, soils reports.

Original interest rate of the mortgage when it is closed. This rate changes for adjustable-rate mortgages.

INQUIRIES

An indication of credit investigations made by companies that are considering granting credit to a person who appears on the credit report.

Inspection Report

Ordered by OTC-PC or CMD Construction Lending upon receipt of a Draw Request form from the borrower(s) and/or builder/contractor.

Installment Debt

Borrowed money that is repaid in several successive payments, usually at regular intervals, for a specific amount and for a specified term. Example: an automobile loan or furniture loan.

Institutional Lender

Financial institution that invests in mortgages and keeps them in its own portfolio.

INSTRUCTIONS TO TITLE

A form that instructs the title company how to record a lien against a property and issue a title insurance policy. Same as TITLE INSTRUCTIONS.

INTEREST

Money charged over time for the use of money.

INTEREST BEARING

A form of interest calculation in which the loan is charged at a daily or monthly rate on the current outstanding balance.

INTEREST RATE

Percentage paid for the use of money, usually expressed as an annual percentage.

Interest Rate Buydown Plan

Arrangement in which the property seller (or any other party) deposits money to an account so that it can be released each month to reduce the mortgagor's monthly payments during the early years of a mortgage. During the specific period, the mortgagor's effective interest rate is "bought down" below the actual mortgage interest rate.

Interest Reserves

A reserve account that holds an estimated interest amount that will be due on the loan during the construction phase of an OTC loan. Most Lenders will advance the interest due as necessary from this account to pay the monthly-accrued interest. Any funds remaining in this account at the completion of construction will be applied to the permanent loan as a principal reduction with new P&I. Calculation: Loan Amount x Interest Rate x 60%/ 12 x Construction Term.

INVESTMENT INCOME

Money earned from investments of money, such as stock dividends and annuity payments.

INVESTMENT PROPERTY

Property used for investment purposes.

INVOLUNTARY LIEN

A lien imposed against property by law or legal action without the consent of an owner. Examples include taxes, special assessments, federal income tax liens, judgment liens, mechanics liens and materials liens. See also LIEN.

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